Question 1

Information regarding the causes of variances is provided when the master budget is compared with actual results.

Accepted Answer

A) True 
 B)False

Question 2

Answer the following questions using the information below:
Sawyer Industries, Inc. (SII), developed standard costs for direct material and direct labor. In 2011, SII estimated the following standard costs for one of their major products, the 30-gallon heavy-duty plastic container.
   During July, SII produced and sold 5,000 containers using 1,100 pounds of direct materials at an average cost per pound of $24 and 525 direct manufacturing labor hours at an average wage of $14.75 per hour.
-July's direct material price variance is:

Accepted Answer

A) $1,400 favorable 
B) $1,100 favorable 
C) $2,500 unfavorable 
D) None of these answers are correct. 
A) $1,400 favorable 
B) $1,100 favorable 
C) $2,500 unfavorable 
D) None of these answers are correct.

Question 3

Answer the following questions using the information below:
Melville Incorporated planned to use $37.50 of material per unit but actually used $36.75 of material per unit, and planned to make 1,800 units but actually made 1,600 units.
-The sales-volume variance is:

Accepted Answer

A) $7,500 favorable 
B) $7,500 unfavorable 
C) $1,200 unfavorable 
D) $1,200 favorable 
A) $7,500 favorable 
B) $7,500 unfavorable 
C) $1,200 unfavorable 
D) $1,200 favorable

Question 4

A favorable price variance for direct manufacturing labor might indicate that:

Accepted Answer

A) employees were paid more than planned 
B) budgeted price standards are too tight 
C) underskilled employees are being hired 
D) an efficient labor force 
A) employees were paid more than planned 
B) budgeted price standards are too tight 
C) underskilled employees are being hired 
D) an efficient labor force

Question 5

The variances that should be investigated by management include:

Accepted Answer

A) only unfavorable variances 
B) only favorable variances 
C) all variances, both favorable and unfavorable 
D) both favorable and unfavorable variances considered significant in amount for the company 
A) only unfavorable variances 
B) only favorable variances 
C) all variances, both favorable and unfavorable 
D) both favorable and unfavorable variances considered significant in amount for the company

Question 6

Answer the following questions using the information below:
Berman's Camera Shop has prepared the following flexible budget for September and is in the process of interpreting the variances. F denotes a favorable variance and U denotes an unfavorable variance.
  
-The most likely explanation of the above direct manufacturing labor variances is that:

Accepted Answer

A) the average wage rate paid to employees was less than expected 
B) employees did not work as efficiently as expected to accomplish the job 
C) the company may have assigned more experienced employees this month than originally planned 
D) management may have a problem with budget slack and might be using lax standards for both labor-wage rates and expected efficiency 
A) the average wage rate paid to employees was less than expected 
B) employees did not work as efficiently as expected to accomplish the job 
C) the company may have assigned more experienced employees this month than originally planned 
D) management may have a problem with budget slack and might be using lax standards for both labor-wage rates and expected efficiency

Question 7

The master budget is one type of flexible budget.

Accepted Answer

A) True 
 B)False

Question 8

All budgets are based on standard costs.

Accepted Answer

A) True 
 B)False

Question 9

Ensuring benchmark numbers are comparable can be difficult because differences can exist across companies with:

Accepted Answer

A) overall company strategy 
B) depreciation methods 
C) inventory methods 
D) All of these answers are correct. 
A) overall company strategy 
B) depreciation methods 
C) inventory methods 
D) All of these answers are correct.

Question 10

Answer the following questions using the information below:
The actual information pertains to the month of September. As part of the budgeting process, Kriger Fencing Company developed the following static budget for September. Kriger is in the process of preparing the flexible budget and understanding the results.
        
-The primary reason for low operating profits was:

Accepted Answer

A) the variable-cost variance 
B) increased fixed costs 
C) a poor management accounting system 
D) lower sales volume than planned 
A) the variable-cost variance 
B) increased fixed costs 
C) a poor management accounting system 
D) lower sales volume than planned

Question 11

Littrell Company produces chairs and has determined the following direct cost categories and budgeted amounts:
   Actual performance for the company is shown below:
   Required:
a. What is the combined total of the flexible-budget variances?
b. What is the price variance of the direct materials?
c. What is the price variance of the direct manufacturing labor and the direct marketing labor, respectively?
d. What is the efficiency variance for direct materials?
e. What are the efficiency variances for direct manufacturing labor and direct marketing labor, respectively?

Accepted Answer

@#IMG-DLM& b. ($7.75 - $7.50)× (3,900)= $975 unfav

Question 12

Possible operational causes of an unfavorable direct materials efficiency variance include poor design of products or processes.

Accepted Answer

A) True 
 B)False

Question 13

Improvement opportunities are easier to identify when products have been on the market for a considerable period of time.

Accepted Answer

A) True 
 B)False

Question 14

Bach Table Company manufactures tables for schools. The 2011 operating budget is based on sales of 40,000 units at $50 per table. Operating income is anticipated to be $120,000. Budgeted variable costs are $32 per unit, while fixed costs total $600,000.
Actual income for 2011 was a surprising $354,000 on actual sales of 42,000 units at $52 each. Actual variable costs were $30 per unit and fixed costs totaled $570,000.
Required:
Prepare a variance analysis report with both flexible-budget and sales-volume variances.

Accepted Answer

@#IMG-DLM& @#IMG-DLM& @#IMG-DLM& @#IMG-DLM& @#IMG-DLM& Total flexible-budget var

Question 15

The flexible-budget variance pertaining to revenues is often called a selling-price variance.

Accepted Answer

A) True 
 B)False

Question 16

A favorable price variance for direct materials indicates that:

Accepted Answer

A) a lower price than planned was paid for materials 
B) a higher price than planned was paid for materials 
C) less material was used during production than planned for actual output 
D) more material was used during production than planned for actual output 
A) a lower price than planned was paid for materials 
B) a higher price than planned was paid for materials 
C) less material was used during production than planned for actual output 
D) more material was used during production than planned for actual output

Question 17

When benchmarking, management accountants are MOST valuable when they:

Accepted Answer

A) present differences in the benchmarking data to management 
B) highlight differences in the benchmarking data to management 
C) provide insight into why costs or revenues differ across companies 
D) provide complex mathematical analysis 
A) present differences in the benchmarking data to management 
B) highlight differences in the benchmarking data to management 
C) provide insight into why costs or revenues differ across companies 
D) provide complex mathematical analysis

Question 18

The relative amount of inputs used to achieve a given output level is known as

Accepted Answer

A) efficiency. 
B) effectiveness. 
C) continuous improvement. 
D) All of these answers are correct. 
A) efficiency. 
B) effectiveness. 
C) continuous improvement. 
D) All of these answers are correct.

Question 19

Answer the following questions using the information below:
Everclean Filter Corporation used the following data to evaluate their current operating system. The company sells items for $10 each and had used a budgeted selling price of $11 per unit.
  
-What is the static-budget variance of variable costs?

Accepted Answer

A) $13,000 favorable 
B) $13,000 unfavorable 
C) $15,000 favorable 
D) $15,000 unfavorable 
A) $13,000 favorable 
B) $13,000 unfavorable 
C) $15,000 favorable 
D) $15,000 unfavorable

Question 20

The process by which a company's products or services are measured relative to the best possible levels of performance is known as:

Accepted Answer

A) efficiency 
B) benchmarking 
C) a standard costing system 
D) variance analysis 
A) efficiency 
B) benchmarking 
C) a standard costing system 
D) variance analysis

Information regarding the causes of variances is provided when the master budget is compared with actual results.

Answer the following questions using the information below: Melville Incorporated planned to use $37.50 of material per unit but actually used $36.75 of material per unit, and planned to make 1,800 units but actually made 1,600 units. -The sales-volume variance is:

A favorable price variance for direct manufacturing labor might indicate that:

The variances that should be investigated by management include:

The master budget is one type of flexible budget.

All budgets are based on standard costs.

Ensuring benchmark numbers are comparable can be difficult because differences can exist across companies with:

Possible operational causes of an unfavorable direct materials efficiency variance include poor design of products or processes.

Improvement opportunities are easier to identify when products have been on the market for a considerable period of time.

The flexible-budget variance pertaining to revenues is often called a selling-price variance.

A favorable price variance for direct materials indicates that:

When benchmarking, management accountants are MOST valuable when they:

The relative amount of inputs used to achieve a given output level is known as

The process by which a company's products or services are measured relative to the best possible levels of performance is known as:

The Accountants Role in the Organization

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

Inventory Management, Just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters

Exam 7: Flexible Budgets, Direct-Cost Variances, and Management Control

Information regarding the causes of variances is provided when the master budget is compared with actual results.

Answer the following questions using the information below: Melville Incorporated planned to use $37.50 of material per unit but actually used $36.75 of material per unit, and planned to make 1,800 units but actually made 1,600 units. -The sales-volume variance is:

A favorable price variance for direct manufacturing labor might indicate that:

The variances that should be investigated by management include:

The master budget is one type of flexible budget.

All budgets are based on standard costs.

Ensuring benchmark numbers are comparable can be difficult because differences can exist across companies with:

Possible operational causes of an unfavorable direct materials efficiency variance include poor design of products or processes.

Improvement opportunities are easier to identify when products have been on the market for a considerable period of time.

The flexible-budget variance pertaining to revenues is often called a selling-price variance.

A favorable price variance for direct materials indicates that:

When benchmarking, management accountants are MOST valuable when they:

The relative amount of inputs used to achieve a given output level is known as

The process by which a company's products or services are measured relative to the best possible levels of performance is known as:

The Accountants Role in the Organization

An Introduction to Cost Terms and Purposes

Cost-Volume-Profit Analysis

Job Costing

Activity-Based Costing and Activity-Based Management

Master Budget and Responsibility Accounting

Flexible Budgets, Overhead Cost Variances, and Management Control

Inventory Costing and Capacity Analysis

Determining How Costs Behave

Decision Making and Relevant Information

Pricing Decisions and Cost Management

Strategy, Balanced Scorecard, and Strategic Profitability Analysis

Cost Allocation, Customer-Profitability Analysis, and Sales-Variance Analysis

Allocation of Support-Department Costs, Common Costs, and Revenues

Cost Allocation: Joint Products and Byproducts

Process Costing

Spoilage, Rework, and Scrap

Balanced Scorecard: Quality, Time, and the Theory of Constraints

Inventory Management, Just-In-Time, and Simplified Costing Methods

Capital Budgeting and Cost Analysis

Management Control Systems, Transfer Pricing, and Multinational Considerations

Performance Measurement, Compensation, and Multinational Considerations

Filters